Farmer confidence has risen for the third consecutive quarter, according to according to Rabobank's latest rural confidence survey.
Dairy farmers have been buoyed by continued strong Chinese demand for Oceania-origin dairy imports, Rabobank says. Photo: RNZ / Carol Stiles
The survey has net farmer confidence sitting in positive territory at +13 percent, up from +10 percent in the previous quarter. In March last year the Covid pandemic pushed confidence down to -44 percent.
Rabobank New Zealand chief executive Todd Charteris said rising commodity prices were the key reason for optimism cited by farmers with a positive outlook for the agricultural economy.
Charteris said pricing for New Zealand's key agricultural exports had held up well over recent months and prices were expected to remain strong moving into the second half of the year.
"Since the last survey in March, dairy farmers have been buoyed by continued strong Chinese demand for Oceania-origin dairy imports which has helped maintain pricing at elevated levels. In addition, we've seen Fonterra announce a strong opening season forecast for the 2021/22 season of $7.25 to $8.75 per kilogram of milk solids, with a midpoint of $8," he said.
Charteris said the incremental lift in farmer sentiment came despite rising farmer concerns over government policy.
"Of the one in five farmers with a pessimistic view of the agricultural economy, 82 percent cited government policy as a key reason for concern. And while we've seen government policy feature as the major concern for farmers across recent surveys, this percentage is an increase on recent quarters," he said.
"There are several government policies which may be causing unease among farmers, however this spike is likely attributable to concerns linked to the recently-finalised advice from the Climate Change Commission which could have potentially significant implications for New Zealand land use and farming systems, including future reductions in total livestock numbers."
Charteris said worker shortages also remained a significant concern for farmers.
"Among pessimistic farmers, 50 percent cited 'other' reasons for expecting the performance of the agri economy to worsen with labour shortages the most frequently mentioned factor in the corresponding verbatim responses," he said.
"For the first time, we also asked all farmers additional questions in the survey about the impact of labour shortages on their business. In response to these, 40 percent of farmers said they 'have been' or 'will be' impacted by labour shortages, with this figure rising to 64 per cent among horticulturalists."